TIDMWOSG
RNS Number : 7497F
Watches of Switzerland Group PLC
09 November 2022
9 November 2022
Watches of Switzerland Group PLC
Q2 FY23 Trading Update
for the 13 weeks (Q2 FY23) and 26 weeks (H1 FY23) to 30 October
2022
Strong broad based trading momentum through Q2
Ongoing market share gains in UK and US
FY23 guidance upgraded to reflect benefit of foreign
exchange
Brian Duffy, Chief Executive Officer, said:
" We are pleased to report another quarter of strong trading
driven by broad based sales growth across our portfolio of world
leading partner brands. Demand remained strong through the quarter
and continues to exceed supply, with client registration lists
extending as consumers respond to innovative new products,
impactful marketing and elevated client service.
"The first half of the year has been a busy period of new
showroom openings - including five showrooms at the iconic
Battersea Power Station in London and additional mono-brand
boutiques across the UK, US and now Europe - together with showroom
refurbishments as we continue to invest to elevate the luxury
experience for our clients.
"Our strong H1 performance underpins our full year guidance,
which we have upgraded to reflect the benefit of foreign exchange
movements. Looking ahead, we remain confident in our Long Range
Plan objectives, supported by a strong pipeline of expansionary
projects as we continue with our strategy of investing for
growth."
H1 FY23 Highlights:
Group revenue GBP765 million (H1 FY22: GBP586 million) +23% at
constant currency, +31% at reported rates
-- Luxury watches +31% at reported rates to GBP667 million,
representing 87% of revenue (H1 FY22: 87%) with growth driven by
increases in average selling price and volume
-- Luxury jewellery +38% at reported rates to GBP56 million as
we continue to elevate our product offer and distribution
-- Continued strong momentum in the US with revenue of GBP311
million (H1 FY22: GBP167 million), +60% at constant currency, +86%
at reported rates with revenue growth excluding acquisitions +44%
at constant currency
-- Strong UK performance driven by domestic clientele, with
revenue of GBP454 million (H1 FY22: GBP419 million), +8% vs H1
FY22
-- Opened four mono-brand boutiques in Europe. Early trading in
line with expectations with two further mono-brand boutiques
opening in H2 FY23
-- Group ecommerce sales +7% on last year at reported rates
-- H1 FY23 Adjusted EBIT is expected to be GBP86 million to
GBP88 million (H1 FY22: GBP67 million, when margins benefitted from
GBP5 million of UK business rates relief)
-- Xenia, the Group's elevated Client Experience Programme, now
embedded across all showrooms and further enhancing the
relationship we have with our clients
-- The Watches of Switzerland Group Foundation has now approved
charitable donations of GBP2.7 million to continue to support
disadvantaged communities in both the UK and US
Q2 FY23 Highlights:
Group revenue GBP374 million (Q2 FY22: GBP289 million), +21% at
constant currency, +30% at reported rates
-- US revenue of GBP159 million, +46% at constant currency, +74% at reported rates
o Revenue growth excluding acquisitions +30% at constant
currency
-- UK revenue of GBP215 million, +9%
o Tourist sales remain very low, but there has been consistent
performance improvement at airports throughout the quarter
-- Ongoing investment in showrooms in Q2 with 9 opened in the UK, 5 in the US and 3 in Europe:
o Five showrooms at the new iconic Battersea Power Station in
London, a Watches of Switzerland showroom featuring a dedicated
Rolex area, Cartier "Espace" and other luxury watch brands; and
four mono-brand boutiques in partnership with OMEGA, Breitling, TAG
Heuer and TUDOR
o Continued rollout of Goldsmiths Luxury concept with the
reopening of our flagship in Meadowhall, Sheffield featuring a
large dedicated Rolex room and Cartier "Espace"; and West Quay,
Southampton with large branded spaces for OMEGA and Breitling
o Four additional mono-brand boutiques in the UK including two
in Canary Wharf, London and the first TUDOR boutique in
Scotland
o Five US mono-brand boutique openings including TAG Heuer and
Breitling boutiques in Boca Raton, Florida
o Opened OMEGA and Breitling mono-brand boutiques in Copenhagen,
Denmark and Breitling mono-brand boutique at Westfield Mall of
Scandinavia, Sweden
Outlook
-- While we continue to monitor the wider macro-economic
environment, we believe that the strength of the luxury watch and
jewellery categories, the unique supply/demand dynamics of luxury
watches and client registration lists, our portfolio of leading
brand partnerships, and the success and agility of our model will
continue to support long term sustainable sales growth. We remain
confident in our Long Range Plan objectives.
-- Our FY23 guidance reflects current visibility of supply of
key brands, announced pricing, and confirmed showroom
refurbishments, openings, and closures and excludes uncommitted
capital projects and acquisitions.
-- Guidance is now upgraded to reflect movements in foreign
exchange with H2 projected using a GBP/$ 1.20 exchange rate. On a
constant currency basis revenue and adjusted EBIT guidance is
unchanged. Guidance is on an organic, pre-IFRS 16 basis and as
previously stated, continues to anticipate the potential for more
challenging market conditions in the second half:
o Revenue: GBP1.50 - GBP1.55 billion (previous guidance
GBP1.45 - GBP1.50 billion)
o Adjusted EBITDA flat to +0.5% (guidance unchanged)
%:
o Depreciation: GBP33 - GBP35 million (guidance unchanged)
o Adjusted EBIT: GBP163 - GBP175 million (previous guidance
GBP157 - GBP169 million)
o Total finance costs: cGBP5.5 million (previous guidance c.GBP4.5
million) reflecting higher interest rates
o Underlying tax rate: 21.5% - 22.0% (guidance unchanged)
o Capex: GBP70 - GBP80 million (guidance unchanged)
including new offices in the UK
o Year end net cash: GBP35 - GBP45 million (guidance unchanged)
The equivalent guidance on an IFRS 16 basis is:
o Adjusted EBIT: GBP178 - GBP190 million (previous guidance GBP172
- GBP184 million)
o Depreciation: GBP81 - GBP85 million (previous guidance GBP79
- GBP83 million)
--------------------------------------------------
o Total finance GBP21 - GBP24 million (previous guidance GBP18
costs: - GBP21 million)
--------------------------------------------------
-- The Group is exposed to movements in the GBP/$ exchange rate
when translating the results of its US operations into Sterling.
Guidance for H2 assumes a GBP/$ 1.20 exchange rate, with a five
cent move resulting in an adjustment of c.GBP15 million to Group
revenue and c.GBP2 million on Adjusted EBIT, on a pre-IFRS 16
basis.
H1 FY23 Revenue Performance by Geography
H1 FY23 H1 FY22 H1 FY23 vs
H1 FY22
---------------
26 weeks 26 weeks
to to Constant
(GBPm) 30 Oct 31 Oct Reported currency
2022 2021 YoY % YoY %
--------- --------- --------- -------------
UK & Europe 454 419 8% 8%
--------- --------- --------- -------------
US 311 167 86% 60%
--------- --------- --------- -------------
Group Revenue 765 586 31% 23%
--------- --------- --------- -------------
Q2 FY23 Revenue Performance by Geography
Q2 FY23 Q2 FY22 Q2 FY23 vs
Q2 FY22
---------------
13 weeks 13 weeks
to to Constant
(GBPm) 30 Oct 31 Oct Reported currency
2022 2021 YoY % YoY %
--------- --------- --------- -------------
UK & Europe 215 197 9% 9%
--------- --------- --------- -------------
US 159 92 74% 46%
--------- --------- --------- -------------
Group Revenue 374 289 30% 21%
--------- --------- --------- -------------
Q2 and H1 FY23 Revenue Performance by Category
Q2 H1
------------------
13 weeks 13 weeks 26 weeks 26 weeks
to to to to
(GBPm) 30 Oct 31 Oct Reported 30 Oct 31 Oct Reported
2022 2021 YoY % 2022 2021 YoY %
--------- --------- --------- --------- --------- ---------
Luxury watches 325 250 30% 667 509 31%
--------- --------- --------- --------- --------- ---------
Luxury jewellery 29 21 40% 56 41 38%
--------- --------- --------- --------- --------- ---------
Other 20 18 10% 42 36 14%
--------- --------- --------- --------- --------- ---------
Group Revenue 374 289 30% 765 586 31%
--------- --------- --------- --------- --------- ---------
The financial information contained herein is unaudited.
Adjusted EBIT is EBIT before exceptional items shown on a
pre-IFRS 16 basis .
Certain financial data within this announcement has been
rounded. Growth rates are calculated on unrounded numbers.
Conference call
A conference call for analysts and investors will be held at
9.00am (UK time) today. To join the call, please use the following
details:
Dial-in (UK): 020 3936 2999
Dial-in (all other locations): +44 20 3936 2999
Participant Access Code: 005060
Contacts
The Watches of Switzerland Group
Bill Floydd, CFO +44 (0) 207 317 4600
Stephanie Crinnegan, Director of Investor Relations &
Corporate Affairs +44 (0) 776 710 0603
investor.relations@thewosgroup.com
Headland
Lucy Legh / Rob Walker / Joanna Clark +44 (0) 20 3805 4822
wos@headlandconsultancy.com
The Group will announce its Interim results for the 26 weeks
ended 30 October 2022 on 14 December 2022.
About the Watches of Switzerland Group
The Watches of Switzerland Group is the UK's largest luxury
watch retailer, operating in the UK, US and Europe comprising five
prestigious brands; Watches of Switzerland (UK and US), Mappin
& Webb (UK), Goldsmiths (UK), Mayors (US) and Betteridge (US),
with a complementary jewellery offering.
As at 30 October 2022, the Watches of Switzerland Group had 188
showrooms across the UK, US and Europe including 74 dedicated
mono-brand boutiques in partnership with Rolex, OMEGA, TAG Heuer,
Breitling, TUDOR, Audemars Piguet, Grand Seiko, BVLGARI and FOPE
and has a leading presence in Heathrow Airport with representation
in Terminals 2, 3, 4 and 5 as well as seven retail websites.
The Watches of Switzerland Group is proud to be the UK's largest
retailer for Rolex, OMEGA, Cartier, TAG Heuer and Breitling
watches.
https://www.thewosgroupplc.com
Disclaimer
This announcement has been prepared by Watches of Switzerland
Group PLC (the 'Company'). It includes statements that are, or may
be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could" or "should" or, in
each case, their negative or other variations or comparable
terminology. They appear in a number of places throughout this
announcement and the information incorporated by reference into
this announcement and may include statements regarding the
intentions, beliefs or current expectations of the Company
Directors or the Group concerning, amongst other things: (i) future
capital expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy and future prospects; (ii) business and management
strategies, the expansion and growth of the Group's business
operations; and (iii) the effects of government regulation and
industry changes on the business of the Company or the Group.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward-looking
statements are not guarantees of future performance. The Group's
actual results of operations, financial condition, liquidity, and
the development of the industry in which it operates may differ
materially from the impression created by the forward-looking
statements contained in this announcement and/or the information
incorporated by reference into this presentation.
Any forward-looking statements made by or on behalf of the
Company or the Group speak only as of the date they are made and
are based upon the knowledge and information available to the
Directors on the date of this announcement, and are subject to
risks relating to future events, other risks, uncertainties and
assumptions relating to the Company's operations and growth
strategy, and a number of factors that could cause actual results
and developments to differ materially from those expressed or
implied by the forward-looking statements. Undue reliance should
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Before making any investment decision in relation to the Company
you should specifically consider the factors identified in this
document, in addition to the risk factors that may affect the
Company or the Group's operations which are described in the Annual
Report and Accounts 2022 in Risk Management and Principal Risks and
Uncertainties.
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